Gujarat Industries Power Co.

The Directors are pleased to present the Twenty-Third Annual Report
 together with Audited Statement of Accounts of your Company for the
 Financial Year ended 31st March, 2008:
 
 (A) Financial Results
                                                         (Rs.  in Lacs)
                                                    2007-08    2006-07
 
 1.   Net Sales                                      93555       79558
 2.   Other Receipts                                  2660        8721
 3.   Total  Expenditure                             68227       55851
 4.   Gross Profit : (1+2-3)                         27988       32428
     (before deducting any of the
      following)
 (a)  Interest                                        5132        5118
 (b)  Depreciation                                    8831        8985
 (c)  Loan Resetting Premium                             0          72
 (d)  Impairment of Assets                               0         102
 (e)  Provision for Deferred Tax                       308       (3249)
 (f)  Provision for Current Income Tax                2715        3070
 (g)  Fringe Benefit Tax                                52          38
 (h)  Tax adjustment of earlier years                  721           0
 5.   Net Profit :                                   10229       18292
 Add :    Balance brought forward                    20627       13262
          from Previous Year
 Add :    Transfer from Capital                          0        4044
          Redemption  Reserve
                                                     30856       35598
 6.       Less: Appropriations :
 (i)      General Reserve                             5000        6000
 (ii)     Expansion Reserve                          10000        5500
 (iii)    Dividend On Equity Shares
         (including Dividend Tax)
          Interim Dividend                               0        2586
          Proposed  Dividend                          4424         885
 (iv)     Carried to Balance Sheet                   11432       20627
          TOTAL                                      30856       35598
 
 (B) Dividend
 
 Your Directors are happy to recommend payment of Final Dividend for the
 year ending 31st March, 2008 @ 25 % i.e. Rs.2.50 per Share on the
 15,12,51,188 Equity Shares.  The net outgo on account of Final Dividend
 shall be Rs.4424 Lacs including Corporate Dividend Tax. The Dividend
 shall be paid to all those members whose names shall appear on the
 Register of Members of the Company on the Book Closure Date i.e. on
 Tuesday, 9th September, 2008.
 
 (C) Operations :
 
 - STATION - I (145 MW CCPP) :
 
 The Station during the year under review generated 1139.00 Million
 Units at a Plant Load Factor (PLF) of 89.457o (highest PLF achieved
 since commissioning of this Power Station) as compared to 1109.70
 Million Units at a PLF of 87.36% in the preceding year. Your Directors
 are pleased to inform that the PLF achieved was higher than that of
 previous year.
 
 The scheduled maintenance of the Station was successfully carried out
 during the financial year under review. The availability factor has
 been maintained at 97.50% during the Financial Year under review.
 
 - STATION - II (162 MW CCPP) ;
 
 During the year under review the Station generated 1126 Million Units
 at a PLF of 79.71% as compared to 1043.81 Million Units at a PLF of
 74.47% (160 MW) in the preceding year. The Station has undergone
 scheduled major overhaul during the financial year under review. The
 Station has operated on Gas during the year under review with the
 availability factor of 94.25%.
 
 Your Directors are pleased to inform that your Company has been making
 all possible efforts to tie up adequate supply of gas for the gas based
 Power Stations at Vadodara. Currently out of the total gas requirements
 of 1.55 to 1.60 MMSCMD for both the Vadodara Station I & Station II,
 1.25 MMSCMD is tied up with GAIL (India) Ltd. and GSPC - Niko on firm
 basis. In addition to these quantities your Company has also arranged
 for additional quantities of RLNG from GSPC for supply from Shell
 Hazira on fall back basis.
 
 Your Directors are happy to inform that during the financial year under
 review major energy conservation and efficiency improvement measures by
 way of modification in Heat Recovery Steam Generator (HRSG) has been
 successfully implemented.
 
 Safety Performance :
 
 Your Directors are happy to inform that your Company has achieved a
 decade of accident free operation as on 23rd July, 2008 at Vadodara
 Plant. Constant efforts are made to maintain accident free operations
 at all the locations.
 
 SURAT LIGNITE POWER PLANT (SLPP):
 
 Station has achieved a Plant Load Factor (PLF) of 85.54%with Generation
 of 1878.54 Million Units, the highest ever since commissioning of this
 Station, during the year under review.
 
 Station also achieved lowest raw water consumption (2.33 M3/ MWH)
 during the year.
 
 Constant endeavors are being made to improve the overall performance of
 the Station, including technology improvement and modifications.
 
 MINING:
 
 Performance of the Mining Division has been very good and total
 requirements of Lignite and Limestone were met from our captive Vastan
 Mines. Total Quantity of Lignite mined during the year was 17.29 Lakh
 MT. Smooth operations in Mining Division helped the Surat Lignite Power
 Plant to achieve the highest ever generation during the year 2007-08.
 
 - NATIONAL SAFETY AWARDS (MINES)
 
 Your Directors are pleased to inform that your Companys SLPP Mining
 Division has won the National Safety Award (Mines) instituted by the
 Ministry of Labour and Employment, Government of India for two
 consecutive contest years 2004 and 2005, for Lowest Injury Frequency
 Rate in the category of mechanized open cast Coal Mines.  The above
 award was received at the hands of Her Excellency Smt. Pratibha
 Devisingh Patil, Honble President of India at a function held on 6th
 May, 2008 at Vigyan Bhavan, New Delhi.
 
 Expansion Plans:
 
 (i) SLPP Phase II : 2x125 MW (Unit-3 & 4)Expansion Project
 
 Your Directors are pleased to inform that your Company is implementing
 2 x 125 MW Expansion Project including development of a captive mine
 thus increasing the generating capacity of SLPP to 500 MW.The new Mine
 at Mangrol is designed to produce 2.4 Million Tonnes Lignite per annum.
 It will not only meet the requirement of expansion Units (No 3 & 4) but
 will also supplement supply of lignite to units no 1 &2 as well.
 
 Your Company has awarded the Engineering, Procurement and Construction
 (EPC) Contract for Expansion Project to BHEL at a cost of Rs. 1199.50
 Crores. The total cost of this expansion project including development
 of a new captive mine, Interest During Construction (IDC), contingency,
 capital spares, staff colony and other components outside the scope of
 EPC contract will be approximately Rs. 1635 Crores.
 
 The site construction activities for Boiler, ESP, Turbine, Chimney,
 Cooling Tower, Raw water reservoir, Lignite handling system, Ash
 handling system and other Balance of Plant area have been going on in
 full swing. The Design, Engineering, Manufacturing & Supply of Main
 plant and major BOPs area have already been completed. The major Civil
 works for Boiler, ESP & Turbine for both units (3&4) have already been
 completed. The Boiler drum for both the units will be lifted in month
 of Aug-2008 & Nov-2008 respectively. The Boiler pressure parts erection
 work for Unit-3 is in full swing and Unit-4 pressure parts erection
 work is under progress. About 20628 MT (77.11%) of structural steel of
 Boiler & ESP area received. Unit-3 & 4 Turbine-Generator raft & Deck
 casting work has been completed. TG Building structure erection work
 for Unit- 3 is under completion and TG Building floor civil work is
 under progress. The agencies for all Balance of Plant packages have
 been finalized and work is under progress.
 
 The switchyard civil work completed and erection work is under
 progress. Chimney RCC shell work completed and Structural work is under
 progress. Cooling tower RCC footings concreting work completed for
 Unit-3 and subsequent civil activities are under progress. The
 estimated Overall Progress of the Project is about 53.0%. The total
 Fund Utilized up to 30th April,2008 is Rs. 762.44 Crore.  The project
 is expected to start commercial operation in the first half of 2009.
 
 (ii) SLPP Station II : 2x250 MW + 20% Project:-
 
 Your Directors are pleased to inform that your Company is also in
 process of developing SLPP Station-ll 2 x 250MW + 20% Project including
 development of a captive mine thus increasing the generating capacity
 of SLPP to 1000 MW Plus.
 
 The pre-award activities for SLPP Station-ll are under progress. M/s.
 NEERI, Nagpur has been appointed as Consultant for Rapid EIA, EMP
 studies / report. M/s. TCE consulting engineers, Bangalore has been
 appointed as consultant for preparation of DPR & Basic and detailed
 design, engineering work, finalization of contractors for different
 packages & Construction Supervision.
 
 (D) Financing of SLPP Expansion Project: 2 x 125 MW (Units 3&4)
 
 Your Directors are pleased to inform that entire debt portion
 aggregating to Rs. 1225.00 Crores for the project at competitive
 interest ratas has been tied up and thus the financial closure for the
 project has been achieved. It is further informed that the expansion
 project is funded in the Debt : Equity ratio of 75:25. You may be aware
 that your Company has already raised the Equity of Rs. 275.00 Crores
 through follow on public issue of equity and the balance equity
 requirements of about Rs 135.00 Crores will be met from internal
 resources.
 
 ACCREDITATION FOR QUALITY MANAGEMENT SYSTEM UNDER ISO CERTIFICATIONS :
 
 Your Directors are pleased to inform that during the year under review
 your Company has got renewal of 150:9001:2000, ISO:14001:2004 and OHSAS
 ISO:18001:1999 certification for Quality Management System (QMS) and
 Environment Management System (EMS) and Occupational Health and Safety
 Assessment Series (OHSAS) for its Power Stations at Vadodara and SLPP
 from M/s TUV India Ltd.
 
 (E) Secured Term Loans :
 
 During the year, the Company repaid a sum of Rs.156 Crores as per the
 schedule of repayment to the Banks and Financial Institutions who have
 extended term loan finance tor the Vadodara Plants and SLPP.
 
 (F) Public Deposits
 
 An amount of Rs. 11.21 lacs relating to 78 depositors was due but not
 claimed by the depositors for repayment as on 31st March, 2008.
 
 (G) Depositories
 
 Your Directors wish to state that the Equity Shares of your Company are
 compulsorily traded in the dematerialized form w.e.f. 26/06/2000.
 Presently 68.32% of shares are held in electronic / dematerialized
 form.
 
 (H) Insurance :
 
 The Companys power plants and mines are covered under the industrial
 All Risk Policy, which provides a comprehensive insurance cover for
 fire, earthquake, loss of profit due to fire and machinery breakdown.
 
 The properties and the insurable interest of the Company including
 mines, buildings (including township at SLPP), Plant and Machinery and
 Stocks are also adequately insured.
 
 (I) Directors :
 
 Shri Man Mohan Srivastava, IAS, Principal Secretary, Energy and
 Petrochemical Department, Government of Gujarat has been appointed
 effective 10th June, 2008 as the Non- Rotational Director and also as
 the Chairman by the Government vide its Resolution dated 9th June, 2008
 vice Smt Vijaylaxmi Joshi, IAS.
 
 Dr. P.K. Das, IAS (Retd.), Director of the Company retires by rotation
 and being eligible offers himself for reappointment.
 
 Shri Guruprasad Mohapatra, IAS, Director of the Company retires by
 rotation and being eligible offers himself for re- appointment.
 
 Shri H. V. Patel, IAS has been nominated by Gujarat State Fertilizer
 and Chemical Ltd.(GSFC) as Director of the Company vice Shri P.K.
 Taneja, IAS.
 
 Your Directors place on record their deep appreciation for the vision
 and leadership provided by Smt. V.L.Joshi, IAS during her tenure as
 Chairperson of your Company. Your Directors also place on record the
 valuable contributions made by Shri P.K.Taneja,IAS during his tenure as
 Director of the Company. The appropriate resolutions for appointment /
 reappointment of Directors are being placed before the members for
 approval.
 
 (j) Human Resources :
 
 The strength of your Company lies in its team of highly competent ana
 highly motivated personnel ?x Vadodara and SLPF. This Has made possible
 for your Company to make signifies improvement and progress in all
 areas of activities of the Company. The employees had taken on the
 challenge to improve the performance of the plants through efficiency,
 productivity and economy. During (he year 2007-08, the Company
 maintained its high standard of Safety. Your Directors place on record
 their sincere appreciation for the unstinting efforts and contribution
 put in by the employees of the Company.
 
 The Company continued in its endeavor 10 impart appropriate and
 relevant training to its employees to upgrade skill to meet the
 challenges that are ahead and to enhance their performance in the best
 interest of the Company. The Company has also taken up an exercise on
 career growth & planning by identifying potentials & training needs of
 employees by engaging professionals in the field.  The industrial
 relations during the year have been cordial.  (K) Particulars of
 Employees -
 
 There are no employees in the Company who are in receipt of salary of
 Rs. 24,00.000/- p.a. or Rs.2,00,000/- p.m., if employed for part of the
 year. Hence the Statement of particulars of employees as required under
 Section 217 (2A) of the Companies Act, 1956, read with Companies
 (Particulars of Employees) Rules, 1975, as amended till date is not
 attached.  (L) Auditors :
 
 M/s K C Mehta & Co., Chartered Accountants, Vadodara, the Auditors of
 the Company, will retire at the ensuing Annual General Meeting and are
 eligible for reappointment.  The Company has received certificate under
 Section 224 of the Companies Act, 1956 from them to the effect that
 their reappointment, if made, will be in accordance with the limits
 specified under Section 224(1 B) of the said Act.  The members are
 requested to appoint the Auditors and fix their remuneration.
 
 (M) Social Responsibility and Welfare :
 
 Being a conscientious corporate body, your Company has been actively
 involved in the socio-economic development and welfare of the people
 living around the power plants at Vadodara and SLPP through Society for
 Village Development in Petrochemicals Area) (SVADES) and Urja
 Foundation in Vadodara and Development Efforts for Rural Economy and
 People (DEEP) at SLPP.
 
 (N) Environmental Protection :
 
 The Company recognises Environment Management as an integral function
 of the operation. Towards this end the Company installed appropriate
 technology for control of pollutants at source. Circulating Fluidised
 Bed Combustion boilers for S02 and NOx control and Electrostatic
 Precipitators for control of particulate emission in the lignite based
 power plant at Mangrol are some of the actions taken by the Company in
 this direction.
 
 Though GIPCL has open cast mine to feed lignite to its Power Plant,
 care has been taken to ensure that such operations do not result in
 creation of wastelands by preserving the fertile top soils and
 spreading them over the back-filled portion of the mine. This enabled
 restoration of the lands for productive agricultural use and for
 development of plantations.
 
 The Company Installed oil mist eliminator in Station-I Gas Turbine #3
 to reduce oil vapor discharge in atmosphere.
 
 (O) Energy Management
 
 Energy Management Cell has been established under the leadership of
 Energy Managers and it is in operation. The Company will take up Energy
 Audit programme in the current year to comply with statutory
 requirement.
 
 (P) Conservation of Energy :
 
 Several energy conservation measures are taken at Vadodara Plants and
 SLPP during the year, and some of the measures which have significant
 results are indicated below :
 
 At Vadodara :-
 
 a) The Company has carried out major Plant modifications, like putting
 baffle plates at chimney end in HRSG reducing heat loss going to
 atmosphere through exhaust, putting sleeves on part of super heater
 tubes reducing system energy consumption and other steam losses in our
 Station -II @ 3.90% (5oC), to achieve better efficiency and energy
 conservation.
 
 b) Subsequent to discontinuation of Naphtha firing In GT-4, the unused
 rotary equipment of Naphtha firing were removed, saving in energy
 consumption of the machine.
 
 At SLPP :-
 
 a) Anti corrosion epoxy paint applied on condenser water box resulting
 in life extension of water box.
 
 b) Installation of sonic soot blowers resulted in saving in steam
 consumption and more heat transfer in APH.
 
 c) Providing additional turns in secondary winding of lighting
 transformer to reduce the voltage thereby reducing the energy
 consumption. This would also enhance the life of ballast & lamps.
 
 (Q) Technology Absorption :
 
 The disclosures of particulars as per Form B are given in the Annexure
 hereto.
 
 (R) Foreign Exchange Earning and Outgo :
 
 During the year there was no earning in foreign exchange.  As regards
 outgo in foreign exchange, please refer to Item No. 05 of Schedule 19
 to the Notes forming part of Accounts appended hereto.
 
 (S) Directors Responsibility Statement :-
 
 In terms of Section 217(2AA) of the Companies Act, 1956, in relation to
 financial statements for the year under reference, the Board of
 Directors state that:
 
 1.  In the preparation of the annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures, if any.
 
 2.  Reasonable and prudent accounting policies have been used in the
 preparation of the financial statements, that they have been
 consistently applied and that reasonable and prudent judgement and
 estimates have been made in respect of items not concluded by the year
 end, so as to give a true and fair view of the state of affairs of the
 Company as at 31st March, 2008 and of the profit for the year ended on
 that date.
 
 3.  Proper and sufficient care has been taken for maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities, if any.
 
 4.  The financial statements have been prepared on a going concern
 basis.
 
 (T) Report on Corporate Governance and Management Discussion & Analysis
 Report :
 
 Your Company has complied with all the mandatory provisions of
 Corporate Governance as prescribed under the Listing Agreement with
 Stock Exchanges, with which the Company is listed. A separate report on
 the Corporate Governance along with the Certificate of Practicing
 Company Secretary forms the part of this Annual Report.  The Management
 Discussion and Analysis report also forms the part of this Annual
 Report.
 
 (U) Acknowledgement :
 
 Your Directors place on record their appreciation for the overwhelming
 co-operation and assistance received from the Government of Gujarat,
 Participating Units, Government of India, BHEL, Industrial Development
 Bank of India Ltd., and other Financial Institutions, Banks and other
 agencies.  The Directors also wish to express their gratitude to
 investors for the faith reposed by them in the Company.
 
                                          For and On behalf of the Board
                                                                    sd/-
 Date    :  10th June, 2008                       M. M. Srivastava, IAS
 Place   :  Gandhinagar                                        Chairman